ECON_2306 => Lecture 3 Slides

3 2 1 what if demand increases d 10

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Unformatted text preview: APHING DEMAND Price of Corn GRAPHING DEMAND Price of Corn P CORN $5 4 P $ !" # * ) ' %& '( )( *" "" +( 3 2 1 What if Demand Increases? D 10 20 30 40 50 60 70 80 Principles of Microeconomics CORN $5 4 $ !" # * ) ' Q 27 %& '( *( )( #( *" ,( "" +( +( - Increase in Quantity Demanded Increase in Demand 10 20 30 40 50 60 70 80 Principles of Microeconomics 3 2 1 D’ D Q 28 o o Quantity of Corn Quantity of Corn 7 GRAPHING DEMAND Price of Corn GRAPHING DEMAND Price of Corn P CORN $5 4 P $ !" # * ) ' %& '( )( *" "" +( 3 2 1 What if Demand Decreases? D 10 20 30 40 50 60 70 80 Principles of Microeconomics CORN $5 4 $ !" # * ) ' Q 29 %& '( .. )( '( *" )( "" #( +( ,( Decrease in Quantity Demanded 3 2 1 Decrease in Demand 10 20 30 40 50 60 70 80 Principles of Microeconomics o o D D’ Q 30 Quantity of Corn Quantity of Corn Example Variables That Shift Market Demand Price Price of related goods Substitutes Goods Substitutes Goods and services that can Shifting the Demand Curve be be used for the same purpose. Complements Goods that are used Goods together. together. Normal Normal good A good for which the good demand increases as income rises and decreases decreases as income falls. Inferior good A good for which the good demand increases as income falls, and decreases decreases as income rises. Income When When two goods, X and Y, are complements, complements which which of the following occurs? a. An increase in the price of good X leads to an An increase increase in the price of good Y. b. An increase in the price of good X leads to a An decrease decrease in the quantity demanded of good X. c. An increase in the price of good X leads to a An decrease in the quantity demanded of good Y. dec in the quantity demanded of good d. An increase in the price of good X leads to an An increase increase in the quantity demanded of good Y. Tastes Tastes Population Population and demographics Expected Expected future prices Principles of Microeconomics Demographics The Demographics The characteristics of a population with respect to age, race, and gender. gender. 31 Principles of Microeconomics 32 8 When When two goods, X and Y, are complements, complements which which of the following occurs? a. An increase in the price of good X leads to an An increase increase in the price of good Y. b. An increase in the price of good X leads to a An decrease decrease in the quantity demanded of good X. c. An increase in the price of good X leads to a An decrease decrease in the quantity demanded of good Y. dec d. An increase in the price of good X leads to an An increase increase in the quantity demanded of good Y. Example A Change in Demand versus a Change in Quantity Change Demanded Demanded A Change in Demand versus a Change in the Quantity Demanded 33 Principles of Microeconomics Principles of Microeconomics 34 Refer Refer to the graph below. Which of the following moves best describes...
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